Calif. becomes first state to require solar panels on new houses

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California became the first state in the nation to require solar panels on all new houses Wednesday when the California Energy Commission voted unanimously in favor of revisions to the state’s building energy code.

The revised code requires all new houses that obtain permits after Jan. 1, 2020, to include solar panels. The revisions apply to single family and low rise houses, condominiums and apartment buildings up to three stories tall. Buildings that are shaded by trees or other buildings or that have roofs too small to accommodate solar panels are exempted from the rule. Houses that include energy storage capability would receive credits that would allow for the installation of smaller solar power systems.

“Today’s rule signals the state’s progression to tackling the electricity demand side and the third largest source of carbon emissions, buildings,” Timothy Fox, vice president and research analyst at Clearview Energy Partners, said.

The solar requirement is part of wider revisions in the state’s 2019 Building Energy Efficiency Standards, which includes smart residential photovoltaic systems, updated thermal envelope standards to prevent heat transfer between the interior and exterior of buildings, residential and nonresidential ventilation requirements, and nonresidential lighting requirements.

The CEC says that under the new standards, nonresidential buildings will use about 30% less energy mainly because of lighting upgrades. On average, the 2019 standards will increase the cost of building a new house by about $9,500 but will save $19,000 in energy and maintenance costs over 30 years, the CEC estimates. Based on a 30-year mortgage, the commission estimates the standards will add about $40 per month for the average home, but save consumers $80 per month on heating, cooling and lighting bills.

During the hearing at the CEC that preceded the vote, the new solar requirement was applauded by a variety of stakeholders, from solar companies such as Sunrun and battery and electric car maker Tesla, to utilities such as Southern California Edison to the construction industry.

“Adoption of these standards represents a quantum leap in statewide building standards,” Bob Raymer, senior engineer of the California Building Industry Association, said during the CEC meeting. "You can bet the other 49 states will be watching closely what happens.”

Fox, however, said he is “skeptical that other states would soon follow California’s lead.” But if the new standards result in more distributed storage, they could help alleviate the state’s “duck curve” problem, which occurs when mid-day solar power exceeds load and then quickly falls off in the evening requiring other resources to ramp up.

California has the most solar power of any state with about 21 GW of solar power capacity, according to the Solar Energy Industries Association. The state with the second highest level of installed solar power is North Carolina with about 4.3 GW.

Currently, between 15% and 20% of new single-family homes in California are built with solar panels installed.

The new standards have the potential to double the market for residential solar panels in California, analyst Julien Dumoulin-Smith at Bank of American Merrill Lynch said in a note to investors. The standards could add about 200 MW per year of additional solar growth, he said.